Shares of fifteen banking licence applicants rose by 0.29% to 10.44% at 14:35 IST on BSE after the Election Commission on Tuesday, 1 April 2014, allowed the Reserve Bank of India to issue licences for setting up new banks.
JM Financial (up 10.44%), Reliance Capital (up 4.29%), IFCI (up 3.98%), IDFC (up 3.94%), LIC Housing Finance (up 3.49%), SREI Infrastructure Finance (up 2.78%), L&T Finance Holdings (up 2.72%), Tourism Finance Corporation of India (up 2.55%), Muthoot Finance (up 1.63%), Magma Fincorp (up 1.55%), Aditya Birla Nuvo (up 0.78%), IIFL Holdings (up 0.71%), Bajaj Finserv (up 0.38%), Edelweiss Capital (up 0.35%) and Religare Enterprises (up 0.29%), edged higher.
The S&P BSE Sensex was up 87.56 points, or 0.39% at 22,534.
The Election Commission (EC) of India on Tuesday, 1 April 2014, gave the Reserve Bank of India (RBI) approval to go ahead with the process of licensing a third set of private banks after the start of economic liberalization in 1991.
The last time RBI licensed new banks was in 2003-04, when it opened the doors to Kotak Mahindra Bank and Yes Bank.
"The Commission has considered your request seeking guidance of the Commission whether it would be appropriate for you go ahead with the announcement of in-principle approvals for Banking licenses in view of the current enforcement of the Model Code of Conduct," the Election Commission said in a letter to the RBI governor posted on its website.
"The Commission is of the view that Reserve Bank of India may take necessary action as deemed appropriate by the Bank," the letter added.
The approval came after the RBI missed the March-end deadline for issuing the bank licences. The RBI on 12 March 2014 approached the EC seeking its approval for granting bank lincences as the model code of conduct had come in place after the general elections announcement on 5 March 2014.
According to reports, the RBI had received 27 applications initially. Later, Tata Sons and Value Industries withdrew.
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